1.0 Executive Summary........................................................................................21.2 Mission......................................................................................................................4

1.3 Keys to Success.........................................................................................................4

1.4 Risks..........................................................................................................................5

2.0 Company Summary.........................................................................................62.1 Company Ownership.................................................................................................6

2.2 Start-up Summary......................................................................................................6

3.0 Products and Services...................................................................................103.1 Product and Service Description.............................................................................10

3.2 Competitive Comparison.........................................................................................11

3.3 Fulfillment...............................................................................................................12

3.4 Technology..............................................................................................................12

3.5 Future Products and Services...................................................................................12

4.0 Market Analysis Summary.............................................................................134.1 Market Segmentation...............................................................................................13

4.3 Service Business Analysis.......................................................................................15

4.3.1 Competition and Buying Patterns.....................................................................165.0 Strategy and Implementation Summary........................................................16

5.1 Value Proposition....................................................................................................16

5.2 Competitive Edge....................................................................................................17

5.3 Marketing Strategy..................................................................................................17

5.3.1 Pricing Strategy................................................................................................175.3.2 Promotion Strategy...........................................................................................18

5.4 Sales Strategy...........................................................................................................18

5.4.1 Sales Forecast...................................................................................................196.0 Management Summary.................................................................................25

6.1 Personnel Plan.........................................................................................................25

7.0 Financial Plan................................................................................................267.1 Important Assumptions............................................................................................27

7.2 Break-even Analysis................................................................................................28

7.3 Projected Profit and Loss.........................................................................................29

7.6 Business Ratios........................................................................................................39

1

1.0 Executive Summary

Stroll Net will provide a unique forum for communication and entertainment

through the medium of public Internet access. In the first year, we will set up 16

Internet-enabled pay-kiosks in public spaces throughout Tech City, in locations

frequented by business travelers and students, but with no nearby internet cafes

or other similar competition. Our flagship location will be next to the downtown

bus and train station, where, for less than a dollar, travelers can check email,

locate phone numbers, and look up directions on any of the multiple online-

mapping sites. They can also simply surf the net, as their time and budget allows.

By accepting both real money (coins and dollar bills) and credit cards, we can

catch both the casual browser and the traveler with money to burn.

Stroll Net is the answer to an increasing demand. Americans want access to the

methods of communication and volumes of information now available on the

Internet, at a cost they can afford, and in such a way that they aren't confined to

a bedroom or office desk. Stroll Net's goal is to provide the community with a

convenient and affordable way to access the Internet away from home and the

office.

This business plan is prepared to obtain financing in the amount of $299,671.

The supplemental financing is required to begin the purchase of public Internet

terminals, the purchase of an office warehouse, office equipment and supplies

and company vehicles, and to cover expenses in the first year of operations.

Additional financing has already been secured in the form of $10,500 of personal

savings from owners Cam Piotr and Bob Green, and a long-term loan of

$100,000.

Stroll Net will be incorporated as a Limited Liability Corporation. This will shield

the owners, Cam Piotr and Bob Green, from issues of personal liability and

double taxation. The investors will be treated as shareholders and therefore will

not be liable for more than their individual personal investment of $5,250 each.

2

The financing, in addition to the capital contributions from the owners, will allow

Stroll Net to successfully open and maintain operations through year one. The

large initial capital investment will allow Stroll Net to provide its clients and

customers with the most innovative public Internet terminal available. A unique

and innovative product is required to provide the customers with a service that is

insurmountable by any competition. Successful operation in year one will provide

Stroll Net a customer base that will allow it to be self-sufficient in year two.

For an investment of $299,671, we project dividends of $100,000 in year two,

and $200,000 in year three, depending on cash flows. These projections are

based on actual business revenues from similar start-up customers of our

internet kiosk supplier in other states. In the first year, with a break-even point of

$42,599 per month, we expect revenues of $727,072 and net profit of 18.5%, or

$134,305. By year three, revenues will increase to $1,136,067, and the net worth

of Stroll Net will increase to $610,320. Dividends thereafter will depend on cash

flows; in year five, investors will have the option of being bought out by the

company owners.

Highlights

1.1 Objectives

Stroll Net's objectives for the first year of operation include:

3

← The introduction of an innovative product that offers an affordable and

convenient way for Internet users to access the Internet away from home.

← The creation of a unique environment that allows traveling business

people access to their own files and programs.

← The placement of 100 public Internet terminals operating throughout the

North MyState area.

For the following two years our growth objectives includes:

← A growth in public Internet terminals placed by 20% each year.

← A growth in revenues by 25% per year.

1.2 MissionAs the popularity of the Internet continues to grow at an exponential rate, easy

and affordable access is quickly becoming a necessity of life. Stroll Net will

provide internet users and business travelers alike the ability to access the

Internet, via our public Internet terminals or a wireless WiFi connection away

from home and the office. For a minimal fee, internet users, young and old, will

be able to access the internet while they stay in hotels, wait at airports, shop in

shopping malls and so on.

We look to be the leader in introducing an innovative and quality public Internet

terminal to our current market. We will add value to our community by

maintaining a quality product and providing a valuable service. Our terminals will

utilize the most advance technologies and our staff will possess the utmost in

customer service experience.

1.3 Keys to SuccessAs a start-up company, new to the industry, we must be focused and work hard

to create an acceptance for ourselves and our products and services within the

marketplace. The keys to our success are:

← The placement of an innovative product and quality service that is able to

both expand existing markets and create new ones.

← A steady, disciplined pattern of growth.

4

← The development of a good relationship with clients and customers.

1.4 RisksThe risks involved with starting Stroll Net are:

← Will there be a demand for the services offered by Stroll Net in Tech City?

← Will the popularity of the Internet continue to grow, or is the Internet a fad?

← Will individuals be willing to pay for the service Stroll Net offers?

← Will the cost of accessing the Internet from home drop so significantly that

there will not be a market for public Internet terminals?

5

2.0 Company SummaryStroll Net, soon to be located on the south side of Tech City, MyState, will offer

the community convenient and affordable way to access the Internet away from

home and the office. Stroll Net's public Internet terminals will provide full access

to email, video email, the Web and other applications, such as a prepaid

storefront. Stroll Net will provide clients and customers with a unique and

innovative product and service.

Stroll Net's public Internet terminals will appeal to individuals of all ages and

backgrounds. The ease-of-use and instructional menu will appeal to the audience

that does not associate themselves with the computer age. Great locations, such

as hotel lobbies and coffee shops, will provide business people with a convenient

way to access the Internet and office files away from the office.

2.1 Company Ownership

Stroll Net is a privately-held Limited Liability Corporation. Cam Piotr and Bob

Green, co-founders of Stroll Net, hold equal stock positions of 26% each as

majority owners. Investors will receive one share of Stroll Net stock for every

$6,244 of investment, up to 48%.

2.2 Start-up Summary

Stroll Net's start-up costs will cover the purchase of public Internet terminals (our

long-term assets), the purchase of an office warehouse, office equipment and

supplies, company vehicles, capital to cover losses in the first year, and capital to

cover any and all expenses required to operate business on a daily basis for the

first year.

6

Short-term Assets - Fixtures: 2 computers = $4,600, one printer = $1,000, one

scanner = $500, 4 tables w/chairs = $2,600, 2 computer desks w/chairs = $2,400,

three telephones = $300, for a total fixture cost of $11,400.

In addition, we plan on a large initial marketing/design budget, to cover the kiosk

design and grand opening advertising.

Start-up

Start-up

Requirements

Start-up Expenses

Marketing/Advertising $4,000

Design Fee $14,100

Freight $6,250

Utilities $500

Professional Fees $1,500

Insurance $1,500

Supplies $500

Postage $111

Total Start-up Expenses $28,461

Start-up Assets

Cash Required $60,000

Other Current Assets $11,400

Long-term Assets $312,810

Total Assets $384,210

7

Total Requirements $412,671

Start-up Funding

Start-up Funding

Start-up Expenses to Fund $28,461

Start-up Assets to Fund $384,210

Total Funding Required $412,671

Assets

Non-cash Assets from Start-up $324,210

Cash Requirements from Start-up $60,000

Additional Cash Raised $0

Cash Balance on Starting Date $60,000

Total Assets $384,210

Liabilities and Capital

Liabilities

Current Borrowing $0

Long-term Liabilities $100,000

Accounts Payable (Outstanding Bills) $2,500

Other Current Liabilities (interest-free) $0

Total Liabilities $102,500

Capital

8

Planned Investment

Mr. Cam Piotr $5,250

Mr. Bob Green $5,250

Additional Investment Requirement $299,671

Total Planned Investment $310,171

Loss at Start-up (Start-up Expenses) ($28,461)

Total Capital $281,710

Total Capital and Liabilities $384,210

Total Funding $412,671

Start-up

9

3.0 Products and ServicesStroll Net's public Internet terminals will provide customers full access to email,

video email, WWW and other applications such as a prepaid storefront. Stroll Net

will provide clients and customers with a unique and innovative product and

service.

3.1 Product and Service Description

Walk-up Internet Access: Customers pay with either cash or credit card and

receive a specific amount of time on the terminal in exchange for their payment.

Customers can surf the Internet, check email and send video email.

Wireless Internet Access: Away from the home, WiFi users can access the

Internet through our Wireless Hotspots.

Prepaid Storefront: An application that allows customers to purchase products

such as Prepaid Calling Cards, Prepaid Wireless Top-up, and Prepaid Mobile

Content (games, graphics, ring tones, etc.).

Multimedia Advertising: Local, regional, or national companies can advertise

using multimedia on-screen advertisements. Advertisements consist of full

motion video "commercials," picture files, or twelve advertising buttons.

10

Technical Specifications

← Wheelchair Accessible

← Front access for easy service and maintenance

← 15.1 inch touch screen LCD monitor

← Industrial spill and vandal proof keyboard

← Web Camera with integrated microphone

← Bill Acceptor and Credit Card Reader

← Stereo Speakers

← Wireless Router

← Surfnet Premier

PC Specifications

← 2.4GHz Celeron Processor

← 40GB hard Drive

← 256MB DDR-RAM

← 52X CD-ROM

← Floppy Drive

← Windows XP Professional

← 3-Year Hotswap

3.2 Competitive Comparison

Stroll Net will be first to place public Internet Terminals in Tech City. Stroll Net will

differentiate itself from other ISPs in Tech City by providing its customers with the

ability to access the Internet even when they are away from their own computer.

We do not expect to replace standard internet access options (home, school, and

work-based computers), but to supplement them; similar ventures, such as

Internet cafes, have seen great success.

11

3.3 Fulfillment

Stroll Net will obtain its public Internet terminals from Supplier One, Inc. located

in Vancouver, BC. Supplier One, Inc. will provide the locating service and the

hardware required to run Stroll Net. Internet access and networking will be

provided through Supplier Two.

3.4 Technology

Stroll Net will invest in terminals with high-speed computers to provide its

customers with a fast and efficient connection to the Internet. The computers will

be reliable and fun to work with. Stroll Net will continue to upgrade and modify

the systems to stay current with communications technology. One of the main

attractions associated with public Internet terminals is the state of the art

equipment available for use. Not everyone has a Pentium PC in their home or

office.

3.5 Future Products and Services

To enhance our initial product line, we will look at a newer model of Supplier One

terminal that offers a greater variety of technologies.

As we increase our presence in the public Internet access business, we will

continue to seek out applications that will allow us to offer a greater variety of

services. A key component of this will be customer feedback.

12

4.0 Market Analysis SummaryStroll Net is faced with the exciting opportunity of being the first-mover in the

Tech City public Internet market. The attractiveness of convenience, combined

with the growing interest in the Internet, has been proven to be a winning concept

in other markets and will produce the same results in Tech City.

The explosion of the Internet has been well documented. The International Data

Corporation predicts that by 2004 there will be 210 million Internet users in the

U.S. alone. Our increasingly mobile society manes that a large percentage of

these users will access the Internet through public Internet terminals.

Research has confirmed that the demand for public Internet terminals is growing

exponentially and that the number of terminals in operation worldwide will reach

434,000 by 2006. By 2007 the number of wireless Hotspots in the U.S. is

expected to grow to 41,000 and generate in excess of $3 billion in revenue.

4.1 Market Segmentation

Stroll Net's clients can be described as individual business owners and medium

to large companies that provide a services to tourist and business travelers alike

as well as students and everyday Internet users. Such clients include, but are not

limited to; airports, hotels, truck stops and coffee shops.

Our customers can be divided into two groups. The first group is familiar with the

Internet and desires a convenient and affordable way to access the Internet away

from home and their offices. The second group is not familiar with the Internet,

yet, and is just waiting for the right opportunity to enter the online community.

Stroll Net's target market includes people between the ages of 18 and 65.

According to the 2000 U.S. Census, Tech County has roughly 490,693 residents

between the ages of 18 and 65. Of these, many are already internet-savvy.

13

Within this group, we will target two groups in particular:

← Students

← Traveling Business People

Market Analysis

Market Analysis

2005 2006 2007 2008 2009

Potential

CustomersGrowth CAGR

Students 2% 35,000 35,700 36,414 37,142 37,885 2.00%

Traveling

Professional

s

3% 24,000 24,720 25,462 26,226 27,013 3.00%

Other 0% 900 900 900 900 900 0.00%

Total 2.38% 59,900 61,320 62,776 64,268 65,798 2.38%

Market Analysis (Pie)

14

4.2 Target Market Segment Strategy

Stroll Net's public Internet terminals will be a magnet for local and traveling

professionals who desire to work or check their email messages away from the

office. These professionals will either use Stroll Net's terminals, or connect their

notebooks to our wireless WiFi Internet connection. Stroll Net's target market

covers a wide range of ages: from members of Generation X who grew up

surrounded by computers, to Baby Boomers who have come to the realization

that people today cannot afford to ignore computers.

4.3 Service Business Analysis

The explosion of the Internet has been well documented. Our increasingly mobile

society means that a large percentage of these users will access the Internet

through public Internet terminals. To be proactive and remain competitive it is

imperative for business travelers to have reliable high-speed access to e-mail,

the Internet and corporate networks. As such, it is becoming a standard for

business travelers to stay only at hotels with high-speed Internet access and

public Internet terminals.

Internet terminals with integrated Wi-Fi hotspots allow users to jump onto the

Internet as easily as they would use an ATM. Our Internet terminals allow the

public to experience rich multimedia content, that cannot be viewed on PDAs.

Internet kiosks will very quickly become a standard feature of all hotels. The

growth of Internet kiosks has very closely paralleled that of ATMs and

payphones.

The fact that there are no public Internet terminals operating in Tech City,

presents Stroll Net with a chance to seize this window of opportunity and enter

into a profitable niche.

15

4.3.1 Competition and Buying Patterns

The main competitors in the public Internet terminal segment are ATT and

BellSouth. However, these businesses have yet to establish a presence in Tech

City and the immediate surrounding areas.

Competition from online service providers comes from locally-owned businesses

as well as national firms. Due to the nature of the Internet, there are no

geographical boundaries restricting competition. However, none of these online

service providers have public Internet terminals available for placement

5.0 Strategy and Implementation SummaryThe important strategy focuses on pulling in power Internet users. Power Internet

users are extremely familiar with the Internet and its offerings. This group of

customers include students and business professionals.

The second strategy focuses on building a large loyal customer base. A large

loyal customer base will serve to attract large, medium and small companies as

clients for our interactive advertising service. All of the advertisements can

connect the user to the advertiser's web site. Due to the high traffic locations in

which our public Internet terminals will be placed, this advertising space will be in

high demand.

5.1 Value Proposition

WiFi hotspots offering public Internet access are everywhere you look today,

from cafes to hotels, from airports to marinas. Connectivity is what travelers

want, and more importantly, are coming to expect. Travelers are making

decisions on where to eat, sleep and work based on the availability of wireless

service.

Clients offering public internet access will be able to tap into new revenue

streams and new customers, and create loyalty.

16

Stroll Net's public Internet terminals make it easy to provide convenient and easy

access to wireless high-speed Internet connectivity. With Stroll Net's public

Internet terminals customers will be able to connect to their corporate networks

and the Internet via a high-speed wireless connection in common areas.

5.2 Competitive Edge

Stroll Net will differentiate itself by providing the community with an innovative

product that offers a convenient and affordable way to access the Internet away

from home and the office. Stroll Net will enjoy the traditional benefits of being first

to the market. As a small company looking to establish itself, we will be attentive

and flexible in meeting our customers' demands.

5.3 Marketing Strategy

Stroll Net will position itself as an aggressive, innovative company that supplies

the market with an affordable way to access the Internet away from home and

the office. Stroll Net will use advertising as its main source of promotion. We will

acquire the services of Empire Communications Group and CyberMark

International, Inc. to launch a diverse advertising campaign placed on television,

radio, the Internet and in the local newspaper.

Stroll Net's brochures, letterhead and business correspondence will further

reinforce these concepts. We also recognize that it costs six times more to attract

a customer than to retain one. With this in mind, we will operate under the

principle that our best marketing is an exceedingly satisfied customer.

5.3.1 Pricing Strategy

Stroll Net bases its prices for Internet and wireless WiFi usage on the "retail profit

analysis" provided by our supplier, Supplier One, Inc. They have been in the

kiosk industry for 5 years and has developed a solid pricing strategy.

17

Determining a fair-market, per-transaction fee for Internet and wireless WiFi

usage is more difficult because there is no direct competition from another public

internet terminal business in Tech City. Therefore, Stroll Net considered two

sources to determine the hourly charge rate. First, we considered the cost to use

other Internet servers, whether it is a local networking firm or a provider such as

America Online. Internet access providers use different pricing schemes. Some

charge a monthly fee, while others charge an hourly fee. In addition, some

providers use a strategy with a combination of both pricing schemes. Thus, it can

quickly become a high monthly cost for the individual. Second, Stroll Net looked

at how public Internet terminals in other markets, such as Miami and New York,

went about pricing Internet access. Evaluating these two factors resulted in the

following:

Walk-up Internet Access - Customers utilizing the terminals for internet access

will be charged a .25 per minute transaction fee.

Wireless Internet Access - Customers utilizing the wireless WiFi connection will

incur a fee of $3.95 per hour with a one hour minimum.

5.3.2 Promotion Strategy

Stroll Net will implement a pull strategy in order to build consumer awareness

and demand. Initially, Stroll Net has budgeted $5,000 for promotional efforts

which will include advertising with coupons for fifteen minutes of free Internet

time.

Stroll Net realizes that in the future, when competition enters the market,

additional revenues must be allocated for promotion in order to maintain market

share.

5.4 Sales Strategy

Stroll Net employs route operators to collect all sales transactions and to perform

routine maintenance on its terminals. Each route operator is responsible for

18

keeping the terminals on his route stocked, clean and operational. Computer

literacy is a requirement for Stroll Net employees. If an employee does not

possess basic computer skills when they are hired, they are trained by our full-

time technician. Our full-time technician is also available for terminals in need of

minor repairs. Stroll Net's commitment to prompt, dependable service is one of

the key factors that distinguishes Stroll Net from all other competitors.

5.4.1 Sales Forecast

Our Sales Forecast is based upon real revenue reports from other customers of

Supplier One, operating in similar urban settings in nearby states. Prepaid

products and advertising will yield the greatest revenue per unit, but we expect

the greatest number of transactions will be in walk-up internet access and Wifi

access.

Sales Forecast

Sales Forecast

2005 2006 2007

Unit Sales

Walk-Up Internet

Access48,787 60,984 76,230

Wireless WiFi

Access23,092 28,865 36,081

Prepaid Products 19,677 24,596 30,745

Multimedia

Advertising5,854 7,318 9,147

Total Unit Sales 97,411 121,763 152,203

Unit Prices 2005 2006 2007

Walk-Up Internet $3.00 $3.00 $3.00

19

Access

Wireless WiFi

Access$3.95 $3.95 $3.95

Prepaid Products $10.00 $10.00 $10.00

Multimedia

Advertising$50.00 $50.00 $50.00

Sales

Walk-Up Internet

Access$146,361 $182,951 $228,689

Wireless WiFi

Access$91,215 $114,017 $142,521

Prepaid Products $196,774 $245,963 $307,453

Multimedia

Advertising$292,721 $365,875 $457,344

Total Sales $727,071 $908,806 $1,136,007

Direct Unit Costs 2005 2006 2007

Walk-Up Internet

Access$0.60 $0.60 $0.60

Wireless WiFi

Access$0.40 $0.40 $0.40

Prepaid Products $1.00 $1.00 $1.00

Multimedia

Advertising$5.00 $5.00 $5.00

Direct Cost of

Sales

20

Walk-Up Internet

Access$29,272 $36,590 $45,738

Wireless WiFi

Access$9,122 $11,402 $14,252

Prepaid Products $19,677 $24,596 $30,745

Multimedia

Advertising$29,272 $36,588 $45,734

Subtotal Direct

Cost of Sales$87,343 $109,176 $136,470

Sales Monthly

21

Sales by Year

5.5 Milestones

The Stroll Net management team has established some basic milestones to keep

the business plan priorities in place. Responsibility for implementation falls on the

shoulders of Cam Piotr. This Milestones Table below will be updated as the year

progresses using the actual tables. New milestones will be added as the first

year of operations commences.

22

Milestones

23

Milestones

Milestones

Milestone Start Date End Date Budget Manager Department

Business

Plan10/1/2004 11/15/2004 $1,000 Cam Piotr Admin

Licensing 11/22/2004 11/27/2004 $1,000 Cam Piotr Admin

Secure

Start-up

Funding

11/29/2004 1/1/2005 $1,000 Cam Piotr Admin

Site

Selection1/15/2005 2/20/2005 $1,000 Cam Piotr Admin

Architect

Designs3/1/2005 3/30/2005 $1,000 Cam Piotr Admin

Designer

Proposal4/1/2005 4/15/2005 $1,000 Cam Piotr Admin

Technology

Design4/1/2005 4/15/2005 $1,000 Cam Piotr Admin

Year 1 Plan 6/1/2005 6/9/2005 $1,000 Cam Piotr Admin

Personnel

Plan7/1/2005 7/5/2005 $1,000 Cam Piotr Admin

Accounting

Plan7/1/2005 7/5/2005 $1,000 Cam Piotr Admin

Totals $10,000

24

6.0 Management SummaryStroll Net is owned and operated by Cam Piotr and Bob Green. The company,

being small in nature, requires a simple organizational structure. Implementation

of this organizational form calls for the owners to make all of the major

management decisions in addition to monitoring all other business activities.

6.1 Personnel Plan

The staff will consist of 8 full-time route operators working forty hours a week at

$10.00 per hour. In addition, one full-time technician (who is more technologically

oriented to handle minor terminal repairs/inquiries) will be employed to work forty

hours a week at $12.00 per hour. This simple structure provides a great deal of

flexibility and allows communication to disperse quickly and directly. Because of

these characteristics, there are few coordination problems seen at Stroll Net that

are common within larger organizational chains. This strategy will enable Stroll

Net to react quickly to changes in the market.

Personnel

Personnel Plan

2005 2006 2007

Lorenzo Mitchell $42,889 $49,680 $59,616

Herman Albany $42,889 $49,680 $59,616

Technician $25,920 $27,040 $29,120

Route Drivers $172,800 $183,040 $199,680

Future Staff $0 $0 $49,920

Total People 11 11 13

Total Payroll $284,498 $309,440 $397,952

25

7.0 Financial PlanSales: Stroll Net is basing their projected Internet usage sales on the financial

snapshot information provided to them by Supplier One, Inc. Internet usage was

estimated by calculating the average number of minutes each customer will

spend accessing the Internet and then generating a conservative estimate as to

how many transactions will be made per day.

Cost of Goods Sold: The cost of goods sold was determined by the "retail profit

analysis" we obtained from Supplier One, Inc. The cost of prepaid calling cards is

20% of the selling price. The cost of Internet access is $50 per month, paid to

Supplier Two for networking fees. The cost of terminal placement is 20% of total

internet access sales.

Salaries Expense: The founders of Stroll Net, Cam Piotr and Bob Green, will

receive a salary of $24,000 in year one, $26,400 in year two, and $29,040 in year

three.

Payroll Expense: Stroll Net intends to hire eight full-time employees at

$10.00/hour and a full-time technician at $12.00/hour. The total cost of employing

nine people at these rates for the first year is $14,720/month.

Rent Expense: Stroll Net is looking to purchase a 2200 square foot facility at

$104.74/sq. foot.

Utilities Expense: Stroll Net is responsible for the payment of utilities including

electric, water and garbage disposal. The basic monthly service charge for

utilities expense will be $168.04. The phone bill will generated by five phone

lines; one will be dedicated to a modem and four for business purposes. The

basic monthly service charge for each line provided by Bellsouth is

$59.95/month. Therefore, the total cost associated with the five phone lines is

estimated at $299.75/month.

Marketing Expense: Stroll Net will allocate $50,000 for promotional expenses at

the time of start-up. These dollars will be used for advertising on television, radio,

26

the Internet and the local newspapers in order to build consumer awareness. For

additional information, please refer to section 5.0 of the business plan.

Insurance Expense: Stroll Net has allocated $1,500 for insurance for the first

year. As revenue increases in the second and third year of business, Stroll Net

intends to invest more money for additional insurance coverage.

Legal and Consulting Fees: The cost of obtaining legal consultation in order to

draw up the paper work necessary for client contracts is $1,500.

Depreciation: In depreciating our capital equipment, we used the Modified

Accelerated Cost Recovery Method. We depreciated our terminals over a three-

year time period.

Taxes: Stroll Net is an LLC and, as an entity, it is not taxed. However, there is a

10% payroll burden.

7.1 Important Assumptions

Basic assumptions are presented in the table below.

27

General Assumptions

General Assumptions

2005 2006 2007

Plan Month 1 2 3

Current Interest

Rate10.00% 10.00% 10.00%

Long-term Interest

Rate11.50% 10.00% 10.00%

Tax Rate 25.00% 25.00% 25.42%

Other 0 0 0

7.2 Break-even Analysis

Break-even data is presented in the chart and table below. With estimated

monthly operating expenses at approximately $37,400, including everything from

payroll to rent and insurance to maintenance of the kiosks, and average direct

costs at roughly 90¢ for every $7.46 of sales, we reach break-even at

approximately 5,700 sales per month. We project reaching the break-even point

in the seventh month.

28

Break-even Analysis

Break-even Analysis

Break-even Analysis

Monthly Units Break-even 5,707

Monthly Revenue Break-even $42,599

Assumptions:

Average Per-Unit Revenue $7.46

Average Per-Unit Variable Cost $0.90

Estimated Monthly Fixed Cost $37,481

7.3 Projected Profit and Loss

The following table contains our projections for profit and loss data. We anticipate

a net profit of approximately $134,300 in the first year, as the Stroll Net idea

catches on and sales increase. With a net profit margin of 18%, these projections

are well within a reasonable range.

29

30

Profit and Loss

Pro Forma Profit and Loss

2005 2006 2007

Sales $727,071 $908,806 $1,136,007

Direct Costs of

Goods$87,343 $109,176 $136,470

Other $0 $0 $0

------------ ------------ ------------

Cost of Goods Sold $87,343 $109,176 $136,470

Gross Margin $639,728 $799,630 $999,537

Gross Margin % 87.99% 87.99% 87.99%

Expenses

Payroll $284,498 $309,440 $397,952

Sales and Marketing

and Other Expenses$53,598 $59,174 $68,279

Depreciation $44,676 $45,000 $45,000

Utilities $5,613 $6,174 $6,792

Insurance $1,500 $6,000 $7,500

Maintenence/

Repairs$3,500 $4,200 $5,800

Travel $13,717 $24,652 $29,961

Payroll Taxes $42,675 $46,416 $59,693

------------ ------------ ------------

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Total Operating

Expenses$449,777 $501,056 $620,977

Profit Before Interest

and Taxes$189,951 $298,574 $378,560

EBITDA $234,627 $343,574 $423,560

Interest Expense $10,877 $8,500 $7,500

Taxes Incurred $44,768 $72,518 $94,311

Net Profit $134,305 $217,555 $276,749

Net Profit/Sales 18.47% 23.94% 24.36%

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Profit Monthly

Profit Yearly

33

Gross Margin Monthly

Gross Margin Yearly

7.4 Projected Cash Flow

Cash flow data for the first three years is presented in the chart and table below.

The table shows anticipated repayment of the long-term loan, as well as

projected dividends which will be paid to investors in years two and three. In year

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three, we will purchase two more paykiosks terminals for new locations. The

more detailed monthly cash flow data can be found in the appendix.

Cash Flow

Pro Forma Cash Flow

2005 2006 2007

Cash Received

Cash from

Operations

Cash Sales $727,071 $908,806 $1,136,007

Subtotal Cash from

Operations$727,071 $908,806 $1,136,007

Additional Cash

Received

Sales Tax, VAT,

HST/GST Received$0 $0 $0

New Current

Borrowing$0 $0 $0

New Other

Liabilities (interest-

free)

$0 $0 $0

New Long-term

Liabilities$0 $0 $0

Sales of Other

Current Assets$0 $0 $0

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Sales of Long-term

Assets$0 $0 $0

New Investment

Received$0 $0 $0

Subtotal Cash

Received$727,071 $908,806 $1,136,007

Expenditures 2005 2006 2007

Expenditures from

Operations

Cash Spending $284,498 $309,440 $397,952

Bill Payments $213,482 $361,737 $409,772

Subtotal Spent on

Operations$497,980 $671,177 $807,724

Additional Cash

Spent

Sales Tax, VAT,

HST/GST Paid Out$0 $0 $0

Principal

Repayment of

Current Borrowing

$0 $0 $0

Other Liabilities

Principal

Repayment

$0 $0 $0

Long-term

Liabilities Principal

$10,000 $10,000 $10,000

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Repayment

Purchase Other

Current Assets$0 $0 $0

Purchase Long-

term Assets$0 $0 $40,000

Dividends $0 $100,000 $200,000

Subtotal Cash

Spent$507,980 $781,177 $1,057,724

Net Cash Flow $219,091 $127,628 $78,283

Cash Balance $279,091 $406,719 $485,002

Cash

7.5 Projected Balance Sheet

Our projected balance sheet is presented in the table below. As sales increase,

and we repay our long-term loan, the net worth of the company will increase from

$281,710 at start-up to over $610,000 by year three.

37

38

Balance Sheet

Pro Forma Balance Sheet

2005 2006 2007

Assets

Current Assets

Cash $279,091 $406,719 $485,002

Other Current

Assets$11,400 $11,400 $11,400

Total Current

Assets$290,491 $418,119 $496,402

Long-term Assets

Long-term Assets $312,810 $312,810 $352,810

Accumulated

Depreciation$44,676 $89,676 $134,676

Total Long-term

Assets$268,134 $223,134 $218,134

Total Assets $558,625 $641,253 $714,536

Liabilities and

Capital2005 2006 2007

Current Liabilities

Accounts Payable $52,610 $27,683 $34,217

Current Borrowing $0 $0 $0

Other Current

Liabilities$0 $0 $0

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Subtotal Current

Liabilities$52,610 $27,683 $34,217

Long-term

Liabilities$90,000 $80,000 $70,000

Total Liabilities $142,610 $107,683 $104,217

Paid-in Capital $310,171 $310,171 $310,171

Retained Earnings ($28,461) $5,844 $23,399

Earnings $134,305 $217,555 $276,749

Total Capital $416,015 $533,570 $610,320

Total Liabilities and

Capital$558,625 $641,253 $714,536

Net Worth $416,015 $533,570 $610,320

7.6 Business Ratios

The following table outlines some of the more important ratios from the Data

communications services industry. The final column, Industry Profile, details

specific ratios based on the industry as it is classified by the Standard Industry

Classification (SIC) code, 4899.9901.

Ratios

Ratio Analysis

2005 2006 2007 Industry Profile

Sales Growth 0.00% 25.00% 25.00% 1.63%

40

Percent of

Total Assets

Other Current

Assets2.04% 1.78% 1.60% 53.65%

Total Current

Assets52.00% 65.20% 69.47% 74.50%

Long-term

Assets48.00% 34.80% 30.53% 25.50%

Total Assets 100.00% 100.00% 100.00% 100.00%

Current

Liabilities9.42% 4.32% 4.79% 24.78%

Long-term

Liabilities16.11% 12.48% 9.80% 18.28%

Total Liabilities 25.53% 16.79% 14.59% 43.06%

Net Worth 74.47% 83.21% 85.41% 56.94%

Percent of

Sales

Sales 100.00% 100.00% 100.00% 100.00%

Gross Margin 87.99% 87.99% 87.99% 52.82%

Selling,

General &

Administrative

Expenses

73.78% 64.05% 63.63% 30.92%

Advertising

Expenses7.37% 6.51% 6.01% 0.82%

Profit Before

Interest and

26.13% 32.85% 33.32% 6.18%

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Taxes

Main Ratios

Current 5.52 15.10 14.51 1.84

Quick 5.52 15.10 14.51 1.60

Total Debt to

Total Assets25.53% 16.79% 14.59% 54.39%

Pre-tax Return

on Net Worth43.04% 54.36% 60.80% 8.03%

Pre-tax Return

on Assets32.06% 45.24% 51.93% 17.61%

Additional

Ratios2005 2006 2007

Net Profit

Margin18.47% 23.94% 24.36% n.a

Return on

Equity32.28% 40.77% 45.34% n.a

Activity Ratios

Accounts

Payable

Turnover

5.01 12.17 12.17 n.a

Payment Days 27 44 27 n.a

Total Asset

Turnover1.30 1.42 1.59 n.a

Debt Ratios

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Debt to Net

Worth0.34 0.20 0.17 n.a

Current Liab. to

Liab.0.37 0.26 0.33 n.a

Liquidity Ratios

Net Working

Capital$237,881 $390,436 $462,186 n.a

Interest

Coverage17.46 35.13 50.47 n.a

Additional

Ratios

Assets to Sales 0.77 0.71 0.63 n.a

Current

Debt/Total

Assets

9% 4% 5% n.a

Acid Test 5.52 15.10 14.51 n.a

Sales/Net

Worth1.75 1.70 1.86 n.a

Dividend

Payout0.00 0.46 0.72 n.a

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